STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NO. FE410038RO
Kay Hakim W. 71st Street : DISTRICT RENT OFFICE
DOCKET NO. L- 3112491 R/T
TENANT: Elinore Chechak
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On May 7, 1991, the above-named owner filed a Petition for
Administrative Review against an order issued on April 2, 1991, by a
Rent Administrator, in which said Administrator had determined the fair
market rent of the housing accommodations known as apartment 22 at 235
West 71st Street, New York City. The fair market rent was determined
pursuant to the special fair market rent guideline promulgated by the
New York City Rent Guidelines Board for use in calculating fair market
The origin of this proceeding was in the tenant's simultaneous filing
(on March 31, 1984) of a complaint of rent overcharge and a Fair Market
Rent Adjustment Application. The complaint alleged inter alia that
although the apartment had been "remodeled with new bathrooms and
kitchen cabinets and appliances," the "wiring, plumbing, windows, etc."
were old. The Application stated that the tenant had not received an
"Initial Legal Regulated Rent Notice Form (DC-1, DC-2, DS-1)" from the
In answer to the complaint and to the Administrator's inquiries, the
owner: submitted documentation indicating extensive renovation of the
apartment just prior to the complainant's occupancy; stated that it had
mailed a copy of the "DC-2" form by certified mail and by certified
mail, return receipt requested, on September 9, 1982, so that the
aforementioned fair-market rent adjustment application was untimely; and
submitted photocopies of receipts for the mailing of certified mail,
each stamped September 9, 1982 and each imprinted "PS Form 3800, Feb.
1982" and "U.S.G.P.O. 1983-403-517"; one bore the number P 639 805 651,
and the other, P 639 805 652.
The tenant replied that she had received her lease by certified mail on
September 13, 1982, with no DC-2 form enclosed, and provided her own
list of the vacancy improvements that had been made.
The Administrator then referred the matter for a hearing to an
Administrative Law Judge, and a notice of same was sent to the parties,
stating that the purpose thereof was to "determine if the tenant ever
received a proper DC-2 notice and if the tenant may file a fair market
rent appeal." Copies of the referral order were sent to the parties.
When the hearing convened on June 29, 1987, the owner being present with
counsel, the Administrative Law Judge stated before testimony began:
"[T]he purpose of today's hearing is to determine if the tenant . . .
ever received a proper DC-2 notice and if the tenant may file a fair
market rent appeal."
The Administrative Law Judge's subsequent report summarized the
pertinent testimony as follows. The tenant testified: that before
assuming occupancy, she had inquired about the previous tenant's rent
but had been told that because the apartment was being renovated, there
was "no need to fill out the prior tenant's rental history rider"; that
"a copy of her lease was mailed . . . without a DC-2 notice"; that
because she had been trying to find out what the prior tenant had paid,
she would have remembered receiving a DC-2 notice, since the one put in
evidence at the hearing indicated a prior rent of only $265; that she
had received a mailbox key on August 9, 1982, but had not moved into the
apartment until October 15; and that she had picked up her lease (sent
by certified mail) at the post office because she had found a paper in
her mailbox "indicating a letter was sent." Kambiz Hakim (one of the
principals of the owner) testified that in September of 1992 he had gone
to the office of his lawyer Mr. Olshever, where the latter had prepared
the DC-2 notice, that that notice had been signed on September 9, that
he, Mr. Hakim, had taken three envelopes each containing a DC-2 notice,
from Olshever and mailed them, and that Olshever never received a "green
card" from the post office. Mr. Olshever testified that he had told
Hakim to mail one notice by regular mail, one by certified mail and one
by certified mail, return receipt requested.
The Administrative Law Judge found the tenant's testimony "credibl[e]"
as to non-receipt of the notice and found, "based upon the entire
record," that she had "never received the DC-2 notice allegedly mailed
by the owner," concluding that the tenant was therefore entitled to a
determination of the "fair market rent" of the subject apartment and
recommending that the Administrator continue to process the case for
In the course of that processing, the Administrator received a copy of
a "Contract for Labor" under the letterhead of " Moliday Construction
Corporation" and bearing the name of the owner's principal and the
address of the subject accommodations over the following "Job Proposal"
and two illegible signatures.
Provide labor for demolition, renovation and reconstruction of
above apartment per diagrams; construct two new bathrooms;
convert former dining room into master bedroom; create and
install air-conditioning opening through-wall; relocate doors
to rooms as indicated; create refrigerator alcove; rebuild
kitchen and install new fixtures and cabinets to be provided
by owner; reconstruct maid's room to integrate with bath as
shown; do other work as indicated on diagram. Contractor
shall have the right to order materials up to $4,000.00 and
charge same to owner, or be promptly paid for by owner if paid
for by contractor.
Estimated price (without changes or additions): $15,000.00.
Also submitted were copies of 19 checks drawn by the owner to the order
of Moliday Construction Corporation, from July through October of 1982,
which totalled over $16,000.
In numerous submissions throughout the pendency of this proceeding
before the Administrator, the tenant vigorously contested, in detail,
the owner's representations as to what it had spent for vacancy
improvements. In the middle of one rather extensive submission, the
tenant stated simply, without accompanying detail or argument, that
Moliday Construction was owned by the family of the owner's principal.
The owner did not respond to that statement before the Administrator.
The ensuing order, here appealed, states as follows. (1) At the
hearing, "the owner was unable to establish that the DC-2 notice was
served upon the tenant. Therefore, the tenant is entitled to challenge
the Initial Legal Regulated Rent."
* * *
(2) "[T]he owner's allegation that the subject apartment is unique is
. . . without merit.
(3) "The Emergency Tenant Protection Act . . . directs that the Fair
Market Rent be determined on the basis of two criteria: (1) a
special guidelines order promulgated by the New York City Rent
Guidelines Board . . . and (2) by `rents generally prevailing in the
same area for substantially similar housing accommodations,' language
referred to as `comparability.'
* * *
"With respect to the second statutory criterion . . . , since the owner
has furnished neither usable June 30, 1974 rent data nor the rental
history data required for consideration of updated comparables, the Fair
Market Rent will be determined solely on the basis of the Special Fair
Market Rent Guidelines."
(4) As to the owner's assertion of its right to a rental increase for
renovations done during the vacancy preceding the tenant's occupancy,
that increase is limited to 1/40 (by law) of $9,266.17 recognized as
spent for same; included in that total are payments for (inter alia):
electrical labor; installation of lighting fixtures, ceiling fans,
heater and outlets; plaster labor; plumbing labor; demolition and
preparation labor; and "construction labor." As to Moliday
Construction, because the owner "failed to refute" the tenant's
assertion that that business belonged to the owner's family, asserted
payments to that concern must be "scrutinize[d] . . . more carefully
than when there is no potential for inflated costs," and under that
standard they will be disallowed because (a) the job proposal contained
no breakdown of costs of its constituent items, (b) "increases [are here
being] granted for cancelled checks payable to individual laborers for
plumbing, plaster, demolition[,] construction and electrical labor . .
. " and (c) "there is no proof of what the fee paid for and whether it
Further the Rent Administrator in his order adjusted the initial legal
regulated rent by establishing a fair market rent of $697.79 effective
September 15, 1982 and directed the owner to refund $147,984.47 to the
The Administrator's order was followed by the instant petition, which
states in substance (a) that the Administrative Law Judge injected error
into the proceeding by making a finding as to whether the tenant had
received the DC-2 notice, rather than as to whether the owner had sent
it to her by certified mail (and that the record, viewed correctly,
shows that the tenant--duly served with that notice--had no right to a
fair market rent appeal); (b) that at the least the order should be
revoked because "the Administrator's belated notification to petitioner
of the complaint precluded the submission of comparability data needed
to justify the rent"; (c) that at the least the matter should be
"reopened for the purpose of [affording] the petitioner an opportunity
to submit `weighted' comparability data to reflect the unique nature of
the apartment"; and (d) that the Administrator erred in disallowing as
vacancy-improvement costs, the aforementioned payments to Moliday
Construction Corporation (having erred initially in applying extra
scrutiny to those payments based on the unwarranted--and inaccurate--
assumption of overlapping ownership between owner and contractor).
The tenant's answer to the petition argues in pertinent part as follows.
(1) The Administrative Law Judge, whose decision as to credibility
should be given great deference, clearly disbelieved the owner's
evidence as to service of the DC-2. (2) In fact, that evidence was (for
various reasons given) contradictory or otherwise incredible. (3) The
owner is unworthy of belief because it has submitted fabricated
evidence, to wit: (a) a purported copy of a note signed by the tenant
acknowledging repairs to the apartment, an original of which has never
been submitted despite the fact that the tenant informed the
Administrator that she had not written or signed that note; and (b) the
aforementioned two post-office receipts, submitted to corroborate the
sending of the DC-2 by certified mail in 1982, which (as the Postal
Service has informed the tenant in a letter appended to her answer) were
not printed until 1983. (4) Moreover the law provides that the 90-day
period for filing a Fair Market Rent Application does not begin to run
until the tenant has received the DC-2 notice. (5) Regarding the
uniqueness of the subject accommodations, "[i]n the subject building
alone, there are at least seven other apartments [, numbers 32, 42, 52,
62, 72, 82 and 92,] that contain the same footage as m[ine and]
basically the same configurations." (6) The owner was aware that its
financial interest in Moliday Construction was at issue herein, and has
"never offered satisfactory proof disputing" the allegation that such
interest existed. Moreover the mere signing of a job proposal cannot
convert it into an "executed contract," and the one in question "is
undated, does not contain any printed letterhead, and nowhere contains
the name of Moliday Construction Corporation." *
* The Commissioner would point out that the imprinted company name is so
high on the page, that a person perusing a copy of the Moliday contract
stapled beneath other pages, will tend not to see the Moliday
The owner's response to the tenant's answer states in substance that the
aforementioned Postal Service letter has been submitted much too late
for this Division to consider it, and that at any rate it does not
establish that the slips in question were printed in 1983.
The tenant replies inter alia, that the question of fraud may be raised
at any time, and that the author of the Postal Service letter is willing
to testify if necessary.
The Commissioner has since received a letter directly from Karen
Roberson, the Postal Service employee who signed the aforementioned
letter submitted by the tenant, stating in pertinent part: that the
information in question "was obtained from historical data files
maintained at Postal Service Headquarters, Business Mail Acceptance,
Washington, DC"; that "[a]t the time of [the tenant's] inquiry, [Ms.
Roberson] was responsible for the revisions, modifications, and re-
ordering of all postal forms (including the certified label) originating
from the Business Mail Acceptance Office"; that Ms. Roberson "would be
more than willing to testify to the information" that she had previously
provided; that that information "may also be available through the U.S.
Government Printing Office in Washington, D.C., providing they still
retain records from February 1983"; and that if the Commissioner should
need further assistance, he should "feel free to contact [Ms. Roberson]
at (312) 765-5495." The Commissioner has sent the owner a copy of this
letter, with an invitation to comment thereon and on the merits of Ms.
Roberson's entire submission, but has received no response from the
The Commissioner is of the opinion that this petition should be denied.
The Administrator correctly followed the determination of the
Administrative Law Judge based upon the credibility of the parties who
testified at the hearing. The Administrative Law Judge found the
tenant's testimony that she had not received the DC-2 notice and that
only a copy of the lease was sent by certified mail to be credible.
Further in answering the instant petition, the tenant presents evidence
that the Postal Service documents presented by the owner to prove the
1982 mailing, were not printed until the following year. By thus
raising the issue of possible fraud, the tenant invokes an exception to
the rule, cited by petitioner, that matters not brought up before the
Administrator may not be raised on appeal.
The remainder of the owner's response to Ms. Roberson's letters consists
of attacks on the contents thereof, based on internal inconsistencies
and on inadequacies in demonstrating the basis of her knowledge.
Despite the importance of the tenant's accusation, petitioner presents
no substantive contradiction as to the printing date in question, nor
even a request for time to investigate; and while complaining that
acceptance of this post-hearing evidence would deprive the owner of the
chance to cross-examine its source, petitioner has not requested a
hearing at which it might do so. We are left with a heavy preponderance
of the evidence indicating that the documents proffered and reproffered
by the owner, to prove a 1982 mailing, did not exist during that year.
Thus Ms. Roberson's submissions will be entertained and the Commissioner
will find that because the tenant was never served with the DC-2 notice,
the Administrator was correct in processing her Fair Market Rent
The next citation of error is predicated on a delay of "many months"
between the tenant's application of March 31, 1984, and the agency's
notice to the owner that it had been filed. The petition asserts that
"the DHCR had the . . . duty to notify any owner who would be adversely
affected by the filing of such a complaint within one (1) month of its
filing. * * * Thus, an owner should have received notification of a
March, 1984 complaint in April, 1984."
The record contains a copy of a form letter from this Division--
addressed to one of the owner's principals at 205 East 85th Street in
New York City, dated April 4, 1984, and headed with the tenant's married
surname and the address of the subject apartment--informing the owner
that the tenant had filed a complaint before April 1, 1984, and that
rental records dating as far back as 1968 might be required. Attached
to that copy is a signed note headed with the docket number of the
complaint herein and the date "April 4, 1984," which states: "On the
above noted date I mailed a notice to the owner(s) at the address
indicated thereon." Because that address is the one the owner provided
as its managing agent's in its 1984 registration, and because inspection
of the voluminous Administrator's file reveals no returned envelope
containing the subject form letter, the Commissioner will find that the
owner was indeed notified of the complaint within a month of its filing,
and will therefore determine that even under petitioner's criteria
(which are not hereby adopted), the owner's ability to submit
"comparables" was not fatally compromised by agency delay.
Apparently arguing in the alternative to the ground just discussed,
petitioner now asserts that it could indeed offer comparables, if only
the subject apartment were not different from every other apartment in
the building. "The subject apartment," the owner states, "contains more
rooms than any other apartment." The ground given for that assertion
is: "Upon information and belief, the DHCR computer registration records
confirm this fact." What those records confirm, however, is that
apartments 32, 42, 52, 62, 72, 82 and 92 have the same number of rooms--
6--as the subject accommodations. Since petitioner points to nothing
else in the record to support its claim of uniqueness, the
Administrator's determination that that claim is meritless cannot be
disturbed (and the Commissioner need not entertain petitioner's theory
regarding the proper treatment of unique apartments in the context of
Petitioner is correct that the signed "job estimate" from Moliday
Construction company qualifies as a contract, and also correct that the
Administrator erred in stating that he was using extra scrutiny
regarding it based on common ownership between owner and contractor (the
owner's failure to address the tenant's "buried" allegation of same
being clearly insufficient to justify that finding). Nevertheless the
Commissioner will not disturb the Administrator's refusal to base any
rental increase on the Moliday Construction documentation.
Examining the Moliday documents with the reasonable scrutiny used in all
proceedings and especially in view of the tenant's dispute herein that
all claimed improvements were made, the Commissioner has little
difficulty in determining that because no values are set forth therein
for the various components of the job (especially in view of some
apparent duplication of jobs done by--and payments credited by the
Administrator to--other contractors herein), the Administrator was not
required to attempt separation of the wheat from the chaff, but could
rather deny credit for the entire undifferentiated bill.
The owner having shown, in sum, no reason to change any of the
Administrator's determinations, the order appealed from will be
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that this petition be, and the same hereby is, denied, and that
the order of the Rent Administrator be, and the same hereby is,
JOSEPH A. D'AGOSTA